Feb 20, 2014
Executives
Stacy Slater - IR Mike Carroll - CEO Mike Pappagallo - President and CFO
Analyst
Michael Moore - JPMorgan Christy McElroy - Citi Craig Schmidt - Bank of America Jason White - Green Street Advisors Steve Sakwa - ISI Group Todd Thomas - KeyBanc Capital Markets Ki Bin Kim - SunTrust Robinson Humphrey Vincent Chao - Deutsche Bank Alexander Goldfarb - Sandler O'Neil Partners Linda Tsi - Barclays
Operator
Good afternoon and welcome to the Brixmor Property Group Fourth Quarter 2013 Earnings Conference Call. All participants will be in listen only mode.
(Operator Instructions). After today’s presentation there will an opportunity to ask questions.
(Operator Instructions). Please note this event is being recorded.
I would now like to turn the conference over to Stacy Slater, please go ahead.
Stacy Slater
Thank you, Amy. And thank you all for joining Brixmor’s Fourth Quarter and yearend 2013 teleconference.
With me on the call today are Michael Carroll, Chief Executive Officer and Michael Pappagallo, President and Chief Financial Officer as well as other key executives who will be available for Q&A. Before we begin I would like to remind everyone that our remarks and responses to your questions today may contain forward looking statements that are based on current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factor section of our S-11 as such factors may be updated from time to time in our filings with the SEC which are available on our website.
We assume no obligation to update any forward looking statements. In today’s remarks we will refer to certain non-GAAP financial measures, reconciliation of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release and supplemental disclosure on the investor relations portion of our website.
At this time it’s my pleasure to introduce Mike Carroll.
Mike Carroll
Thank you, Stacy and good afternoon. During our IPO process late last year, we communicated a clean and simple business model, offering investors a single asset class of wholly owned grocery anchored community and neighborhood shopping centers, positioned to generate sustainable growth, primarily through a rationalized portfolio in the leveraging of its below market leases.
That leverage was apparent this quarter as we signed new leases at over $15 per square foot versus a portfolio average of 11.93 a square foot, an increase of over 25%. The mark to market opportunity in our portfolio is significant.
This is a long term opportunity and as I said last quarter it should not be understated. We are confident in our grocery strategy and the resilient traffic it provides.
Our grocery sales at over $500 per square foot continue to trend upwards at an average of 2%-3% per annum and exceed the sales of the average US grocer in the US by 35%. And amid today’s chatter of slowing retail sales we look to our own portfolio and the consistent sales that our grocers produce.
It is the bedrock of our forward growth and provides stability amidst continued consumer uncertainty. During our initial quarters of public company we again achieved positive momentum across all key operating metrics.
Our growth continues to be driven by top line revenues; in fact our top line has now increased for 29 consecutive months. Healthy demand for space, combined with the breadth of our portfolio and retailer relationships fuelled substantial leasing velocity and by piggybacking the sheer volume of anchor commencements in our centers over the last two years we were able to make important strides in our small shop leasing.
During the year we executed over 2,200 leases aggregating almost 13 million square feet exceeding the productivity of our shopping center peers. Importantly we are leasing efficiently realizing multiple deals with retailers by taking advantage of our established relationships and uniform leases.
During 2013 with anchors we executed 15 leases with Dollar Tree, eight with Pet Co., five with Ross Dress for Less and five with Jo-Ann. For midsized tenants we completed five or more leases with Five Below, Hibbett Sports, Lumber Liquidators and Sleepy’s.
And on the small shop side we executed more than 15 leases with both Great Clips and Subway and eight deals with both Jimmy Johns and Pizza Hut. Multiple lease transactions such as these with a wide variety of national tenants point to the unparalleled size and scale of our leasing platform.
As a result we increased occupancy year over year by a 110 basis points including a 150 basis point gain in small shops. We recognize that we have further leasing to accomplish with respect to space under 10,000 square feet and we are confident given the quality anchor commencements in our centers that we will drive continued small shop occupancy growth.
But most importantly we will accomplish this leasing at compelling rental rates. We have been patient and focused on increasing anchor occupancy.
Our anchor occupancy is now at 97% and our targeted approach to small shop leasing is taking effect is evidenced by the strong leasing at market rates. Again new leases for the quarter were signed at $15.04 a square foot and when I compare that to our expiry schedule between now and 2016 at $11.13 a square foot, the mark to market opportunity looking forward is significant.
Proactively managing our merchandize mix is critical to maximizing our cash flows and enhancing the quality of our centers. During 2013 our leasing results reflected the convenience and value orientation of our portfolio.
37% of all new leases executed were service tenant, primarily medical and personal care and 20% were to restaurants followed by solid general merchandise leasing. With 92% of new leases executed during the year classified as internet resistant.
An instrumental part of our leasing efforts also involves the specialized initiatives of our national accounts program. During 2013 and into 2014 the program focused on four pillars; first, executing early renewals which enables us to lock in strong credit, national and regional retailers with long-term leases.
Benefits include achieving higher rents with earlier rent starts and renegotiating unfavourable lease terms. By example during 2013 we executed five early renewals with TJX companies, resulting in a 12% total increase in rent while improving co-tenancy and prohibit use clauses at all five of the leases.
Second, capitalizing on downsizing opportunities to right size retailers while maximizing ABR. This allows us unique opportunities from mark-to-market below market leases.
By example during 2013, we completed three down size with Staples, entering a Wal-Mart neighbourhood market, Sleepy’s and [indiscernible] and increasing ABR by 15%. Other examples include an Office Depot downsize with AutoZone at 67% increase in ABR and an old navy downsize with five below and 84% increase in ABR.
Retailers will pay more rent for the ability to maximize sales in the right size space. These transactions have a profound effect on the properties, generating more sales and driving additional traffic out of the same space, benefiting the remainder of the shopping center.
Currently we have identified 144 additional opportunities that we will consider during 2014. Third, anticipating at risk tenants to proactively identify replacement retailers in implementing our asset management plans.
Such store closures often lead to significant growth opportunities. By example in 2013 we released 10 former fashion book stores at a 62% increase over prior rents.
Lastly expediting the legal process to accelerate lease commencement timing. In addition to utilizing uniform leases with many national and regional retailers, we have also matched single point attorneys to these accounts.
As a result we have expedited lease negotiations and executions with our most active retailers to an average of 45 days from 90. This includes such retailers as Hibbett Sports, JoAnn, Wal-Mart, Party City, PetSmart, Ross Dress for Less, Shoe Carnival and Sleepy’s.
In fact we’re on track to execute a Wal-Mart lease in less than 28 days this month. As we look forward into 2014 I am confident we have the operational expertise and the infrastructure to further unlike value in our portfolio.
We are motivated and excited by our prospects of the year ahead. I’ll now turn the call over to Mike to run through our financial results and capital plan.
Mike Pappagallo
Thank you Mike. Our fourth quarter financial metrics reflected the positive operating performance that Mike just spoke about.
And our strategy of operating a portfolio anchored by high volume market leading grocers across the top 50 MSA is powering strong growth. Same property net operating income generated a 3.9% increase for the quarter and 4% for the full year.
Notably only 20 basis points of the quarterly increase can be traced to redevelopment projects underscoring the growth from core leasing and spreads on renewals and options. Also indicative of the quality of the results is that 85% of the NOI improvement is the consequence of top line rent growth with the balance coming from improved expense recovery in tandem with the occupancy increases.
Fourth quarter pro forma FFO was $0.44 per share, a $0.01 progression from the third quarter and in line with our guidance, bringing the full year amount to $1.68 per share. Fortunately we’re one quarter closer to eliminating the pro forma presentation for current period results.
The first quarter 2014 will be the final period that we will have to account for the properties transferred to Blackstone, as this legal transfer took place on January 15th. As such, the first quarter will be a last in this dual presentation.
We will however continue to provide the corresponding 2013 quarters for the income statement on a pro forma basis. So you can have a more meaningful comparison of period over period results.
With respect to guidance, our 2014 earnings and operating expectations remain the same as provided as part of last quarter’s earnings report, which should not be surprising considering this guidance was established and communicated only two months ago. The drivers for the full year FFO guidance range of $1.80 to $1.84 per share continued to be from NOI growth, and improvement in interest costs.
Our FFO target represents a growth rate of between 7% to 9.5% as compared with full-year 2013 results. The full-year same property NOI growth target remains at between 3.7% to 4.1%.
With respect to how same property growth will trend within the year I'd offer that the first half of 2014 will tend to be on the lower end of the range with the second half of the year on the upper end, for the simple reason that the opposite situation occurred in 2013 and you will have a bit of the tougher comp effect. Moving to capital structure; our efforts here are tightly focused on three goals.
First, reducing our level of secured debt and increasing the size of our unencumbered asset pool; second, eliminating high cost debt via secured or unsecured; and third continuing to allocate a portion of free cash flow for absolute debt reduction. As mentioned in our press release we took certain actions in January to refinance over $480 million of secured mortgage debt as well as eliminate $58 million of outstanding bonds with an interest rate in excess of 7%.
As a result the company increased its unencumbered pool to 47% of its properties from 40% at the end of December and 44% of net operating income is now unencumbered. As we use our credit facility to fund these payoffs we are currently in the market for a new five-year unsecured loan to term out the funding.
The response from the bank syndicated loan market has been great so far and we expect to complete the transaction by the end of the quarter. So the remainder of 2014 our planned calls for a further reduction of approximately $270 million of secured debt.
And by the end of this year we expect that our proportion of unencumbered net operating income to total NOI will exceed 50%. Our net debt to EBITDA will be reduced by four tics and our fixed charge coverage will increase up to 2.8 times.
There is also additional opportunity for interest savings beyond 2014 as the average rate of maturing in pre-payable debt is in excess of 5.5% for 2015 and 2016. We will continue to aggressively manage the debt profile to be in a position as an issuer of investment grade bonds within the next 12 months.
And now I’ll turn it over back to Mike.
Michael Carroll
Thank you will open up for questions at this time.
Operator
(Operator Instructions). Our first question comes from Michael Moore at JPMorgan
Michael Moore - JPMorgan
Just a couple of things here; first of all the line of credit, what's the balance on it now?
Mike Carroll
It’s approximately 550 million.
Michael Moore - JPMorgan
And then what sort of term loan size are you looking for?
Mike Carroll
At a minimum we will pursue a $400 million loan, that’s where we’ve initiated the financing level at, and depending on the level of interest and activity we would upsize if the money was fair.
Michael Moore - JPMorgan
And in terms of the investment-grade rating did you see you hope to have one within a year or just begin the process of pursuing it within a year.
Mike Carroll
No, as we speak today we are and continue to be in active dialogue with the rating agencies and we are providing them with significant amount of analysis, in terms of our current situation and our forward plans. So my point about, within the 12 month period, is based on the projections of where our quantitative information is and also qualitatively where we're heading.
So ultimately it is the rating agency’s decision, but just based on the trend lines and then that dialogue, it is my hope and expectation that we can get there within the next 12 months.
Michael Moore - JPMorgan
And last question from me, can you talk a little bit about CapEx trends just overall what you’re thinking about for 2014 and how you see that trending to 2015?
Mike Carroll
You know, in total, the total capital spend is somewhere in the neighbourhood between $130 million to $150 million, that is a composite of maintenance CapEx at the properties and on-going and normal leasing capital, and then anchor repositioning and redeveloping capital. It’s the sort of breakdown that you see in our supplemental report.
When we foresee that similar level occurring over the next few years as additional opportunities on the anchor repositioning side occur, redevelopments expand and then we begin a normalised process of maintenance CapEx which we've roughly estimated about $0.20 a foot within the property base. So expect a similar diet, Mike over the course of the next few years.
Operator
The next question comes from Christy McElroy at Citi
Christy McElroy - Citi
Just following up on Mike's CapEx question; in terms of the $130 to $140, and looking at the breakout that you have on page 13 of the Sup, and sort of versus $157 that you did in ’13. How would I split that $130 to $140, which I think is related to just leasing which does not include the building improvements into sort of those different buckets of revenue enhancing CapEx versus leasing cost.
And then with regard to sort of the 67 million of in process anchor repositioning on page 35, does that fall into the leasing cost bucket or is that considered sort of building additions and expansions?
Mike Carroll
The first question with respect to the break outs, the maintenance CapEx, the building improvements that are capitalized that are considered non-revenue enhancing that will be roughly in the $20 million range, it’s a bit higher in 2013 as we finished up a program of some catch up maintenance if you recall in our S-11 we did provide some historical information associated with the level of spending. So outside of that caption, the balance is going to be split between the tenant improvement and leasing commissions and in the building expansion.
A different way that we cut it is that roughly half of the remainder outside of the maintenance CapEx will be focused on for lack of a better term a more traditional leasing tenant improvement and allowance dollars and the other half more focused on our anchor repositioning and redevelopment activities and that’s generally how we’re splitting it. Sometimes it relates to building additions and sometimes it relates to direct payments to tenants, it all depend on the deal terms and the structure.
Christy McElroy - Citi
Okay. So just unclear on just the anchor repositioning dollars excluding sort of the straight redevelopment project, as we look a year forward and we look at the schedule that you have, does that fall into that building additions and expansions or leasing are you saying that's sort of half and half?
Mike Carroll
About half and half. I think you should look and think generally that those building addition and expansion and the tenant improvement dollars are going to be relatively close together on a run rate basis.
Christy McElroy - Citi
Okay, got you. And then sorry if you covered this on the last call.
In the 3.7 to 4.1, what is the assumed impact from redevelopment? I think you said it was only 20 basis points in the quarter.
And can you sort of comment on how expense growth might play a role in that forecast?
Mike Carroll
Could you just repeat the last part of your question?
Christy McElroy - Citi
Sure. How expense growth might play a role there.
So what’ the impact of expense of the same store expense growth on the NOI growth?
Mike Carroll
Right. As it relates to the competition, the redevelopment component as I suggested on the previous calls is tough to predict simply because of the timing of rent starts and the like and the identification of new projects.
But we’ve had two quarters so far that information and when you think about 20 to 40 or 20 to 50 basis point impact at the low to high, that’s generally it because most of our value add capital is actually focused on what we are calling the bread and butter anchor repositionings retaining activity, it’s something that all shopping center companies do as a bread and butter part of their business. What we’re separating out is some of the broader larger redevelopment projects which you can see from our schedules are generally higher dollar projects.
So making that separation our redevelopments are not going to be as impactful as you would first think. Now, as to expense growth, clearly there will be some expense growth anticipated in our NOI results.
However, we are very focused on expense containment and we have in certain of our regions and model in which we are locking in and aggregating costs more broadly with selected vendors. So as we anticipate some expense growth we think on balance it will be somewhat muted because of the procedures and the practices we have put in place to buy if you will in bulk.
Christy McElroy - Citi
Okay. And then just lastly in regards to your ’14 FFO guidance, you guys have done a good job of sort of laying out all the drivers and the number seems pretty straight forward.
But are there any moving parts that we should be thinking about that could change your forecast? So anything that you would potentially get more visibility on as we go further into the year whether it’s leasing or financing related having to do with some of the debt deals that you’re talking about?
Mike Carroll
Last quarter one thing I mentioned that the variation is in the FFO guidance and in turn the NOI guidance. Really our FFO guidance there is two things, NOI and interest cost and that’s really it.
I think it underscores the simplicity of our business model. So when you take each of those two components, certainly the NOI growth will be more driven by anything else than timing of commencements and leasing velocity which as we sit here today we feel good about.
On the interest side of the equation I think the real determinant there is the expense of additional repayment of debt and the interplay between variable rates debt of line of credit and ultimately when we lock in or fix those, fix that debt with longer term instruments and that will be the variation. But as each quarter goes by, we will give you updates and the guidance range is based on what has actually transpired.
Operator
Our next question comes from Craig Schmidt at Bank of America.
Craig Schmidt - Bank of America
Given that there are no non-core assets at this point in the portfolio, that said do you have AD properties that are not in the top 100 MSAs. I was just wondering what the projected growth rate is of these AD assets relative to those assets in sort of top 100 MSA?
Mike Carroll
Craig hey it’s Mike. It’s something we had in the S11, one of the things that we tried to communicate people is that growth rates there are similar or slightly better than what they are in the top 50.
And when I look even this quarter our occupancy in the top, the non-top 50 markets are higher than what we have in the top 50 markets, its 50 bps roughly, it’s roughly 50 basis point difference. So we’re still seeing great opportunities in those markets and opportunities to upgrade and we’re doing something right now in one of our markets where we’re replacing a Sweetbay, which was a food brand with a new Wal-Mart neighborhood market.
That’s a big quality upgrade and we’re confident that that’s going to drive very desirable shop leasing on the back of that. So as long as we continue those opportunities, we’re very comfortable with what we own in those markets.
Craig Schmidt - Bank of America
So it sounds like you are pursuing redevelopment efforts for those AD assets or some of them?
Mike Carroll
We’re if there is opportunities there but again I would say more of what we’re doing today, I think we’re fortunate, we’re fortunate to have a portfolio of loan market leases, we can effectively maintain the same occupancy by putting better tenants who will pay more for this space because they can drive more sales out this space and utilize it better. And s that has been the primary opportunity that we have been taking advantage of and you see in the supplement we have a very long list of anchor repositioning and we continue to see there was opportunities and it really is effectively replacing one tenant with another who is going to pay more and can do more business out of this space.
Operator
Your next question comes from Jason White at Green Street Advisors.
Jason White - Green Street Advisors
I know that a lot of times you receive sales information from some of your tenants and I was wondering if you could give us even anecdotally some information on sales trends and maybe even if you could split that out between small shops and from your larger boxes, anything you are seeing there will be helpful.
Mike Carroll
Sure, will I think it certainly referenced my opening comments, I hope we’re seeing 2% to 3% growth consistently from grocers we have seen no fall off over. And I am going to tell you Jason over a multi-year period I think we can go back a decade and we continue to see good 2% to 3% growth from grocers.
But then just looking at our portfolio and where we’re seeing -- just getting somewhere we’re seeing strength. We’re seeing good strengthen off price apparel sales, have a 4% comp the home category in our portfolio was north of 7.5%, entertainment both north of 7%.
And then on the weaker side of things office as you would expect and books down both in the 5% area. So I think that’s consistent with where we would expect it and I would take this opportunity, wanted to take too I think some of the discussion on retail sales is been a little bit over blown, we don’t see any signs of mass closings or anything like that.
And I don’t think that retailers don’t -- they don’t base their capital plans on one quarter’s sales. It’s more of a longer, take a longer term view we have heard nothing different coming out of what was a relatively soft December and January was soft and February will be soft too because of the weather but our retailers they’re messaging to us and they are still giving out their capital plan.
And at this point basically the ‘14 plan is close to being baked and they’re working on their ‘15 and ‘16 plans. So we don’t see any retreat or even that gives us pause there.
I think it’s just normal cycle of retail sales.
Jason White - Green Street Advisors
And then on the transaction front. I know you did previously, there wasn’t going to be a lot this year but I was wondering if that’s still the case or of there is anything else on the burn that you might be seeing?
Mike Carroll
It’s still the case, I think as we move through the year, we’re in the market, we’re looking in the market I will say. But what we want and what we’re measuring capital allocation against is the opportunities we have within the portfolio.
And so I think it had to be something that was very unique for us to be active this year, and again I’d say we’re building more towards the latter half of next year as we think about that internally.
Jason White - Green Street Advisors
And so what does your transaction team spend a lot of their time doing these days? Is it still evaluating lot of opportunities even though you might not be active or something else they spend their time?
Mike Carroll
No ultimately what we said is we’re in this business for growing NOI. And when we see slower NOI growth prospects we start to think about what we are doing internally with the assets and whether they are primed now, whether we have achieved our target and are prime for dispositions or trade areas change.
And so, the team is actively working on portfolio management view of looking at those assets but also reengaging back into the acquisition market with both brokers and sellers. And so I think it would have been irresponsible of us to come out and say we’re going to buy anything this year when haven't been in the market.
So, we're building back in the market. We want to, again what we are looking for its grocery anchored, it’s got growth component to it.
And we want to take our time and make sure that we are market intelligent when we are ready to pull the trigger on. Thanks.
Jason White - Green Street Advisors
And last question was just, as you have been identifying opportunities to lease up the portfolio and to trade out some tougher tenants and the better tenants, is there any trouble spots you can counter maybe that would be easier than they have ended up being?
Mike Carroll
I'll look to Tim Bruce to maybe add something but I would say we have been pleasantly surprised, I mean if you think about even the category that had a lot of discussion this year. The office supply source.
We renewed every one of them that we didn’t choose to do a downsizing wins. So, we didn’t have any closing, any fallout in that category.
And I would say the nice thing about where we are with both that and if I think about Barnes & Noble where we have had no fallout and we have had them renew. We have been able to do things where we think it’s beneficial to us.
We have been able to do things potentially on the short end of the curve as it relates to the lease term and be able to feel like that we can kind of control our own destiny with those spaces on our schedule and not on theirs. So, I think that’s the one piece of it and if I just back where we continue to watch Kmart and know that overtime we are going to get stores back and we think we will be very fortunate to get those stores back given the low rent levels and that continue to be some we watch.
But we do see anytime we get anything back we see solid demand for us.
Tim Bruce
Jason, this is Tim, I mean the ability mark those leases that are clearly below market-to-market as an anchor repositioning or as the broader program on redevelopment. I mean those are real opportunities that’s the core of our business because on top of that once those anchors open, we have a significant amount of follow-on leasing from shop space which clearly then everything rises.
So, it’s very, very, very good business for us.
Operator
The next question comes from Steve Sakwa at ISI Group.
Steve Sakwa - ISI Group
Thanks. Good afternoon.
Just two questions on the kind of lease rollover schedule, it looks like about 75% of the tenants kind of renewed or had options, I am just curios one if you think that that’s kind of a 75-25 split kind of a pretty reasonable guesstimate and I thought Mike you have said where you were sort of implying that the new lease spread, you are signing leases in the 15s and leases coming of close to 11. I mean I guess you think the overall blended spread is at kind of the 10% level, is a figure than can growth from a here or is that a number you think holds pretty constant first question?
Mike Carroll
I think the blended spreads, we would be in the same range where we are in now and part of that is because tenants do have options. But I would say Steve, we are doing a lot of proactive things whether it be the, when tenants options come up the downsizing plays into that.
Those tenants have options. We are renewing them in smaller space at higher rents and brining new tenants in at higher rent and we are doing a lot of just replacing.
I will go back to this sweet day Wal-Mart example as the type of leasing that we are doing where we are growing NOI with the same occupancy if you will. And so that, I think that’s something that’s a great opportunity in our portfolio and its part of a lot of reasons whether it be in the central years or whether it be just the makeup of our portfolio being it’s not a new construction portfolio.
It’s an in-field portfolio that average age of shopping center build was 30 years ago. And so we have the benefit of recharacterizing and repositioning the tenants in the centers to a very accretive rent advantage.
Steve Sakwa - ISI Group
Okay. Then second question I guess for Mike Pappagallo, just want to make sure I understand the term loan that you are I guess looking to get that would be I guess the floating rate loan that would be able to be paid off kind of whenever you did a bigger or unsecure debt deal is that correct?
Mike Pappagallo
That’s correct, Steve. It will look very similar to the five year term loan that we originated in the fall of last year.
Steve Sakwa - ISI Group
Okay. And then just as we try and think out about kind of estimates beyond kind of ’14 and just thinking about ’15 and ’16, I realize you’re going through this investment grade rating.
I guess would it be fair to say that it a kind of a large debut bond offering is I guess probably a best case a late ’15 event maybe early ’16 event?
Mike Carroll
I’d like to be more aggressive and positive in my thought process there that it would be well before the later part of 2015. And again I can’t speak for the rating agencies in terms of when we can achieve investment grade status but as I look at the various metrics that exist today and I look where they’re going and our plan as well as our already demonstrated access to the capital markets and our liquidity I think there are many positive signal and a positive situation that exist right now that could enable us to get there well before late 2015.
Operator
Our next question comes from Todd Thomas at KeyBanc Capital Markets.
Todd Thomas
Hi. Thanks.
Good afternoon. First question circling back to expenses I was just wondering should we expect any impact in the first quarter from all of the snow and weather is there any increased expense slippage or anything that might not be reimbursed that we should be thinking about?
KeyBanc Capital Markets
Hi. Thanks.
Good afternoon. First question circling back to expenses I was just wondering should we expect any impact in the first quarter from all of the snow and weather is there any increased expense slippage or anything that might not be reimbursed that we should be thinking about?
Mike Carroll
It is fair to say that because of the weather there will be some increases in expenses and some slippage but we do not feel that it will be material or have any impact on our projection. One thing I would note is that the follow on to what I had said earlier about our expense growth as part of the bulk buying and aggregation of contracts we have a fixed price situation for snow plowing for this season over many of the states and markets that were most impacted by the snow and the weather.
So for us you can either say we dodge the bullet or we did a smart thing but clearly our expenses are not rising to the level that one would expect sitting considering the level of snow and other attending issues that came with that. So it’s very manageable for us as we go through the first quarter.
Todd Thomas
Okay and then just looking at another breakout of your portfolio where roughly one third and you characterize as traditional neighborhood shopping centers and two thirds is community centers. I was just wondering if you’re seeing any differences in demand between those two sort of sub property types anything in terms of occupancy or growth there.
KeyBanc Capital Markets
Okay and then just looking at another breakout of your portfolio where roughly one third and you characterize as traditional neighborhood shopping centers and two thirds is community centers. I was just wondering if you’re seeing any differences in demand between those two sort of sub property types anything in terms of occupancy or growth there.
Mike Carroll
I would say no. I mean we’re not really seeing anything that’s materially different.
I think we have seen a movement with specialty grocers and some of the larger centers looking to come into those which we’ve been acting upon some of those. But I think the shop demand has been solid throughout but it gets back to a lot of what our story is, and we’ve done a lot of anchored leasing over the last two years.
And we’re now cycling through the commencements that those anchored commencements coming on and now just being honest the centers are more appealing them more they’re more able they’re more saleable to those shop retailers because we have good strong quality anchors in there. And what we see now in the 5,000 under space where we’ve had an anchor open in the last year we’ve increased shop occupancies small shop occupancy 370 basis points.
So that really has been the most material change for us. And to some of the earlier question that’s why we’re so focused on this anchor repositioning.
If we can get the right anchors in those spaces and we can continue to invest money there we absolutely see the benefits on the shop side.
Todd Thomas
Okay. Is there a noticeable difference in the occupancy rates between those two sort of segments of the portfolio at all would you happen to have that metric by any chance?
KeyBanc Capital Markets
Okay. Is there a noticeable difference in the occupancy rates between those two sort of segments of the portfolio at all would you happen to have that metric by any chance?
Mike Carroll
I don’t have it with me. I would say if there is not a material different and we can get back to you with the exactly numbers.
Todd Thomas
Okay. And then just lastly, I was just wondering when the same store pool.
When will that reflect the entire IPO portfolio of 522 properties?
KeyBanc Capital Markets
Okay. And then just lastly, I was just wondering when the same store pool.
When will that reflect the entire IPO portfolio of 522 properties?
Mike Carroll
That will be the first quarter of 2015.
Operator
The next question comes from Ki Bin Kim at SunTrust.
Ki Bin Kim - SunTrust Robinson Humphrey
Thanks.
Mike Carroll
Hi. How are you doing?
Operator
I’m sorry looks like Mr. Kim disconnected so we’ll go onto Vincent Chao at Deutsche Bank.
Vincent Chao - Deutsche Bank
Hey everyone, maybe just a quick question going back to the secured debt repayments that’s already happened because I think I heard 270 more for the rest of the year. Just curious where that’s coming out of in terms of the maturity schedule at it stands today as it the larger commitment of booking at ’15 or you taking into some at ’16 as well.
Mike Carroll
Yes, well in our supplemental package on the debt maturity schedule page we did pro forma the impact on the maturity table at least as what’s been repaid so far. And if we think of that and that’s on page 15 for your reference, Vin.
And as we look to the balance of the year it will be a mix between the 2015 stack and 2016 stack, but for the most part 2015.
Operator
Okay, we’ll try to go back to Mr. Ki Bin Kim at SunTrust.
Ki Bin Kim - SunTrust Robinson Humphrey
Thanks, I guess I got a little too excited there. So couple of quick follows up if I look at your page the disclosure on page 34 and 36 on your base rent for new leases just using like the fourth quarter as an example it says 1504 (Ph) page 34 and little bit different on page 36.
Is that difference basically a cash versus GAAP, and is it a little bit different for every quarter previous side two?
Mike Carroll
The page 34 is the year one rent page 36 is more the average rent over the term.
Ki Bin Kim - SunTrust Robinson Humphrey
Okay. And I might have asked this in the past but if you can just remind us given that lot of your releases do have options, tenant options, what is the predominant language in those options?
And what percent of it goes for at fair market rent versus a kind of fixed increase?
Tim Bruce
Hi it’s Tim. That’s on a contract basis as you mentioned and the term varies in lease requirements and by market generally and bumps are in the 10% range sometimes of the CPI quantifier and some markets it’s on a fair market value, it’s scattered all over the board.
But generally saying for safe to say it’s in the 10% range.
Ki Bin Kim - SunTrust Robinson Humphrey
Okay. And it seems like for new leases your terming looks pretty high at nine years; I think that’s higher than lot of your peers.
Is that just a mix issue where a lot is anchor versus small shop?
Mike Carroll
I think that’s correct.
Ki Bin Kim - SunTrust Robinson Humphrey
Okay. And just one last question, if I go back to your IPO documents I think in 2014 you had a plan for the $500 million term loan but also in addition $300 million and I think you had a 2.1% interest rate.
Is that still on the plan or has that changed?
Mike Carroll
Our plan is still to access the market primarily through bank debt which essentially is a term loan and continued use of our credit facility. What is still on the table and Ki, based on some of the other questions you’ve heard here is at what point will we be in a position to term out the debt even further through the investment grade market and the like.
But as a general matter relative to the analytics that you may have done during the IPO process and where we are today for all intensive purposes we’re on the same track.
Operator
The next question comes from Alexander Goldfarb at Sandler O'Neil.
Alexander Goldfarb - Sandler O'Neil Partners
Hi good afternoon. Just two questions here, the first one is just going into the lease table you guys provide.
With the extensions that take like let’s say the next year two takes about 10 points of the rollover and so brings like 940 on the four and 14.5 down to like 4.5. Is it your view that most of this people extend take advantage of those options or as you guys try to aggressively go after under market space is there a way to get at more that space than the schedule would suggest?
Mike Carroll
Well, our view is it will take a good percent of those options but I think that we have this a little bit in earlier questions but yes we are trying to aggressively get into that space. And I think when you think about the macro environment right now where you have retailers still very focused on efficient store sides that’s a great opportunity for us this whole idea of downsizing and that dislocation around that space gives us the opportunity to work with these tenants on modifying those terms.
And today we’ve been very successful doing that, modifying terms with tenants getting holding out the care of putting them in the right size space where in their view they can do almost the same sales they’ll pay more rent for that efficiency. And we’ve been able to do that and then that fill the remaining space with a market rent tenant.
So it’s been a good opportunity it’s something that we’re very-very focused on.
Alexander Goldfarb - Sandler O'Neil Partners
Okay. And then the next question is for Mike P.
As you talked about the term loan possibly entering that market than the investment grade option, what is your view on hedging if you were going to, if you were seeing that investment grade was an opportunity or an option in the foreseeable future would you is your inclination to lock in hedge or your view is that trying to call where interest rates are going as always a very tough competition therefore, just take the market where it is and not pay that additional cost.
Mike Pappagallo
Alex I don’t know if I would characterize it as me attempting to call the market, generally have not been successful in the past on that but as a general matter though I don’t think we would aggressively pursue a derivative or anticipatory hedging strategy, as part of the process. If we look as a parallel course of action for a term loan then into an investment grade positioning, there is always a private placement market as well as an alternative.
And we have received good feedback that that’s a viable alternative to access longer dated fixed interest rate funding. So that would be another course of action, should the lease indicate it would be a longer move to investment grade.
And then that’s I believe that really is at our disposal today as we wanted to.
Operator
The next question comes from Linda Tsi at Barclays.
Linda Tsi - Barclays
Looking at the rent growth by tenant size on page 34, and it seems like the greatest growth was in the 20,000 to 35,000 size box where you had about 20% growth. Was there anything driving that in particular?
Mike Carroll
Primarily our anchor position, anchor repositioning deals that we have done and in the last quarter, we had two deals being completed at JoAnne deal in Cleveland Ohio and Planet Fitness in Trenton, New Jersey. I think when you look at our portfolio Linda, the age of the spaces and those the era of when a lot of those existing leases were cut, really provide a great opportunity to mention one of the projects in Hamilton, New Jersey which is basically Trenton.
That’s a 30 year old acme store at roughly $3 rent and we’re able to repurchase that at a double-digit rent to a new tenant. It really adds a lot of growth in that category for us and so that is the opportunity we have in the portfolio.
Unlike others who may have new construction portfolios, that’s not the make up with this portfolio.
Linda Tsi - Barclays
Should you think a mid to high teen rate for that category would be appropriate going forward?
Mike Carroll
It’s always going to vary by center and by the opportunity and I would tell you that as we look out today, I mean we still have great opportunity in that space but we are being very aggressive in where we think we can pick up a $3 spread which may only be 15% lift, we’re trying to pick that up. So I think it’s going to continue to trend high but it’s a hard thing to gauge on a quarter-to-quarter basis.
Linda Tsi - Barclays
And then when you look at your mix of retailers, are there certain categories growing faster than others when you break it out between grocers, various services, general merchandise. I realize the mix isn’t going to move quickly but are there any emerging trends to think about.
Mike Carroll
I’ll start and then I’ll let Tim come in on it. This year we had a big movement with services and restaurants.
And I’d say one of the categories that is working really well for us is medical, we’re seeing a lot -- we think it’s in advance of -- it has been advance of Obamacare and the anticipation of a lot of people having access to insurance that didn’t have it before. And we have seen a lot of the regional hospital chains and medical providers looking for 3,000 to 5,000 square foot units in our shopping centers.
And we think that’s a perfect complement to neighborhood or community grocery shopping centers. So that’s been a nice piece and the food uses have been strong.
You have other examples there?
Tim Bruce
We did 59 new leases with medical tenants last year and we expect that to increase in 2014 and there are the new lease bases by pull -- up by over 60% and 48% by GLA and 43% ABR. We’re targeting regional healthcare providers and affiliates of regional hospitals.
And as I mentioned earlier we expect this to grow. And we’re seeing that across the country, so significant part of our business right now.
And then on the restaurants, in ‘13 we did 158 new leases with restaurants, second highest in our category of tenancy. And again we continue to see that business continue to grow.
Mike Carroll
Chipotle and Panera Bread and other opportunities continued to be expanding out there.
Operator
At this time there are no further questions and I would like to turn the conference back over to Mr. Carroll for any closing remarks.
Mike Carroll
Thank you very much. It’s our pleasure and we look forward to talking to on our next quarter.
Operator